Part of the capital market where new financial instruments are sold and bought. An instrument can be sold only once in the primary market. Funds raised in the primary market go directly to the issuer (the government or a corporation).
When a company issues stocks in the capital market for the first time, the sale is called initial public offering (IPO).
Once issued, the instruments sold on the primary market can be traded again on the secondary market.
The primary market serves as a way to facilitate capital formation in the economy. Capital goods are those good that have the capacity to increase the supply of consumption goods in the future.
Many companies issue instruments on the primary market to carry out new investments. Also, many investments are done with the expectation of obtaining a profit by issuing stocks in the primary market.
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